Skywest Acquiring 21 CRJ-550s
 

omg the end is near?

sad times

Plus flying 20 additional crj 700s for AA

So GJ is selling 21 CRJ's to SW, hmmmm... As of today GJ has 41 operating (airworthy) ac, not sure how many of those they own. 31(ac) daily ops flying today. SW is not going to operate them as of today. GJ has a fairly large number of pilots on furlough (145?). They will lease them to another UAX carrier (?). Did GJ not already miss payments on some leases this year? If GJ is burning cash could they operate those 21 ac on lease back at a profit, when they were not making money when they owned them? I would bet that if GJ was going to lease those ac back from SW that would have been part of the public announcement(why not). If SW is going to lease them to another carrier I could see why they would not announce it yet because that would be the end signal for GJ. The timing is interesting because originally TSA was going to operate until end of 2020. Then a quick shut down was announced. I suspect GJ might have an end of 2020 timeframe as well, hence the sale of these ac to SW. The leak of a GJ shutdown by year end could cause UAL some problems if GJ operations become erratic with crew staffing issues. I heard TSA had issues after they announced the year end shut down, so (UAL) GJ does not want a repeat. What other carrier would lease the 21 ac from SW? Right now they operate out of ORD and EWR. May bee the cash from these ac could be used to buy time for GJ until next year so they can hold on until then. If they are burning cash today I wonder what there cash flow would be with a lease. Knowing the ownership of GJ I would not suspect he would take this cash just to burn through it. More likely take the cash and run.

I was thinking something similar and then someone else gave me a plausible explanation.

Initially OO took back 16?, aircraft from G7 due to defaults in payments. So i thought that if they didn't have that money to begin with why on earth would OO lease another 21 aircraft to them. But if the 21 aircraft that OO bought belonged to G7, then that will raise capital to G7 to hopefully survive the current pandemic and perhaps come back later.
From OOs perspective, if G7 runs out of money they will take the airframes back and control the majority of the 550s, they can choose to operate them themselves or lease them to another UAX operator. The only ones shown interest has been Mesa and AW. So i think from that perspective its a win-win situation for OO.

You may be right. It just seems to be odd that there is this SW deal but no announcement who will fly them. What difference does it make now that we know GJ is selling them. Why not tell us they are going to continue to operate them as well, this is just a paper shuffle for GJ to survive. That would clear the air and everyone(GJ) could plan ahead with a multi year deal. Naaa, there is something to this. Also as soon as the FED money ran out 10-1 they had to operate on their own. 30 days later they sell 21 ac. If I owned those ac I would want cash now so I can break even on those ac before I stop flying them. Once they are grounded he is still paying for them but not operating them. SW probably got a pretty sweet deal because GJ was a motivated seller. Time will tell, but GJ is not a well managed airline so for them to survive in a very competitive era is questionable. HK (GJ owner) has had a good run but he is now getting older and is ready to ride off into the sunset with his cash.

It is more than likely a purchase and lease back deal. If it isn't that and they actually take the aircraft then that probably means Hulas has given up.

Here is the earnings transcript. He does not mention anything about a long term lease agreement with GJ. Just that they bought them and these ac are currently being flown by GJ as 550's. He left quite a bit of room for something to happen between now and the end of the year. He could have said in plain english that those ac would remain there under a long term contract with GJ flying them. May bee we will get the info from GJ and this will all be clarified.



Savi Syth -- Raymond James -- Analyst
Okay. That's helpful. And then just the United partner you're subleasing to, is that different than the partner before? Because I just want to make sure that you to get comfortable that this is not like the 29 aircraft that you had and you only placed 13.

Wade Steel -- Chief Commercial Officer

So it is -- they are different airplanes. We did buy those, but it's to the same United Express regional partner.

Savi Syth -- Raymond James -- Analyst

Okay. But you're comfortable that they can take it this time?

Wade Steel -- Chief Commercial Officer

These aircraft are already flying there and have already been converted and in the 550 configuration, and they're already operating in their system today.



"Let me shift gears to our leasing business. Today, we announced an agreement to acquire 21 used CRJ700s in a 50-seat configuration and lease the aircraft under a multiyear term to another regional operator. The aircraft purchases and leases are expected to be completed in Q4 of this year."

Another regional operator, that about does it for me. Clock is ticking for GJ.

In the past during Skywest earnings calls, they do not mention specific companies. It has usually been “we will lease 5 CRJ900s to a 3rd party” or “we are leasing CRJ700s to a 3rd party.” They never specify. Don’t get too wrapped up in the fact that they didn’t disclose the 3rd party.

Also, SW is Southwest. OO is SkyWest. GoJet is G7.

WN is Southwest, but the other two are correct.

I agree that he’s reading FAR to into things - it says “leased to another regional operator” meaning they won’t be flown at OO, and instead at another regional where “they’re already operating in their system today” which means G7.

However this now puts OO in the position to absorb the flying should G7 not be able to make payments after this cash infusion, or in the same scenario to lease to ZW or YV should they have interest still.